Nonresident Hedge Fund Tax

Nonresident Hedge Fund Tax

Governor Paterson Backpeddles on Hedge Fund Tax

New York's Governor Patterson appears to have dropped the proposed tax on hedge fund managers working in New York but living in Connecticut. His press secretary explained his position on the issue: "That provision was removed and will be removed again when the governor submits a proclamation for special session for Wednesday when he calls the legislature back."

The proclamation aims to call for a special session of the state legislature to consider measures required to complete the state budget.

The proposal to tax nonresident hedge-fund managers, which would raise an estimated $50 million a year to help bridge New York's $9.2 billion current-year deficit, has sparked concerns that managers would relocate their funds to neighboring Connecticut. Its governor, Jodi Rell, said she would welcome the funds with open arms.

Tim Selby, president of the New York Hedge Fund Roundtable and an attorney at Alston + Bird LLP, said he welcomed Paterson's decision.

"I am encouraged that our legislative body in New York was open-minded enough to see the likely consequences of an ill-conceived piece of legislation before it was too late," he said. "This could have been the commencement of a tipping point that would gave been disastrous for New York City." Source

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